Correlation Between Applied Genetic and Centene Corp

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Can any of the company-specific risk be diversified away by investing in both Applied Genetic and Centene Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Applied Genetic and Centene Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Genetic Tech and Centene Corp, you can compare the effects of market volatilities on Applied Genetic and Centene Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Applied Genetic with a short position of Centene Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Genetic and Centene Corp.

Diversification Opportunities for Applied Genetic and Centene Corp

-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between Applied and Centene is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Applied Genetic Tech and Centene Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centene Corp and Applied Genetic is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Applied Genetic Tech are associated (or correlated) with Centene Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centene Corp has no effect on the direction of Applied Genetic i.e., Applied Genetic and Centene Corp go up and down completely randomly.

Pair Corralation between Applied Genetic and Centene Corp

Given the investment horizon of 90 days Applied Genetic Tech is expected to under-perform the Centene Corp. In addition to that, Applied Genetic is 1.73 times more volatile than Centene Corp. It trades about -0.48 of its total potential returns per unit of risk. Centene Corp is currently generating about -0.27 per unit of volatility. If you would invest  8,994  in Centene Corp on June 27, 2022 and sell it today you would lose (1,123)  from holding Centene Corp or give up 12.49% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Applied Genetic Tech  vs.  Centene Corp

 Performance (%) 
       Timeline  
Applied Genetic Tech 
Applied Performance
0 of 100
Over the last 90 days Applied Genetic Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Applied Price Channel

Centene Corp 
Centene Performance
0 of 100
Over the last 90 days Centene Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Centene Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Centene Price Channel

Applied Genetic and Centene Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Applied Genetic and Centene Corp

The main advantage of trading using opposite Applied Genetic and Centene Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Genetic position performs unexpectedly, Centene Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Centene Corp will offset losses from the drop in Centene Corp's long position.
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The idea behind Applied Genetic Tech and Centene Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Check out your portfolio center. Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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